Some parts of state budget can't be raided for schools

As lawmakers struggle this year to find the money to comply with court mandates to fund schools and mental health services, complicating the budget picture is the reality that those aren’t the only programs the state legally must fund.

The state Office of Financial Management estimates that roughly two-thirds of the state budget is protected, meaning those programs are ones the state is required to pay for either under the state constitution, under past court decisions, or by agreement with the federal government.

Such programs include not only K-12 education, but also Medicaid — which the federal government funds at a level the state must match — and payments on state-incurred debt.

Democrats say the remaining one-third of the budget consists of programs that were already cut so deeply during the Great Recession that they can’t be cut much more. Democratic leaders argue tax increases will be necessary to increase education spending as ordered by the state Supreme Court without gutting other programs further.

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Meanwhile, the Republican mantra to find more money for basic education has been “fund education first” — or, put all of the state’s available revenue toward education and let remaining state programs fight over the scraps. On the campaign trail last year, many Republicans argued that taxes should be considered only to fund other areas of the state budget, and only after the state’s school funding needs are met.

“We do have a legal obligation to fund education, and we expect to fund education first,” Senate Majority Leader Mark Schoesler, R-Ritzville, told reporters in January.

The debate will soon come into sharper focus as legislative leaders submit competing proposals for a new two-year budget. Having just received an update on how much money they’ll have to work with, lawmakers in the Democrat-led state House are expected to release their proposed budget as soon as late March, with Republicans in the Senate to unveil their spending plan soon after.

If the Legislature were to take the approach of funding education first, what would that look like? What programs can be sacrificed at the altar of K-12 schools without creating more legal trouble for the state?

Not paying for about $440 million in already-negotiated state worker raises could be a start, as could be suspending Initiative 1351, a voter-approved measure to decrease K-12 class sizes that state officials estimate will cost $2 billion in the next two years.

If lawmakers also rule out cost-of-living raises for teachers, the books could almost balance, now that the state is projecting about $270 million more in available revenue for its upcoming two-year budget.

But if lawmakers want to pay for any of those things — or bolster any other programs, as many say they want to do — spending cuts would still be necessary. And they could legally look to only a few areas to find those savings. The state might be able to make small trims in mandatory programs, but those cuts alone cannot balance the budget.

Here’s a look at the areas that are generally protected and the ones that are legally expendable in the state budget, according to the Office of Financial Management. Numbers are based on projected maintenance levels for the 2015-17 budget, and don’t include new expenditures lawmakers may be considering.

PROTECTED: About $23.9 billion, or 65.9 percent of the budget

K-12 Basic Education: $15.13 billion, or 41.7 percent of the budget

Why it’s legally protected: The state has a constitutional duty to fully fund public schools, as laid out in Article IX of the state constitution. Not doing so in recent years has landed the Legislature in trouble with the state Supreme Court.

In the McCleary case, the court ruled in 2012 that the Legislature was failing to meet its constitutional duty to fully fund basic education, and must correct that by 2018.

What that means is that budget writers from both political parties are looking to add at least $1 billion to K-12 education spending this year. Any move to cut K-12 education programs or to not provide enough additional funding could result in court sanctions.

Debt service and pension costs: $2.63 billion, or 6.5 percent of the budget

Why it’s legally protected: The state has taken out construction bonds over the years to fund capital projects, including public buildings and schools. Under rules outlined in the state constitution, lawmakers are required to make payments on that debt, or else a court can compel them to. Defaulting on debt payments also could make it more expensive for the state to borrow money in the future.

The state also has to pay its share of pension contributions and benefits for state employees. According to a 2013 report from State Treasurer Jim McIntire, “The pension benefits owed to these public servants are constitutionally protected by contract, and state and local governments (including school districts) must pay them.”

Mandatory Medicaid: $3.54 billion, or 9.8 percent of budget

Why it’s legally protected: The federal government matches every dollar the state pays with a certain percentage of federal funds to carry out Medicaid programs. Not paying the state’s share would cause the state to lose about $10.8 billion in federal Medicaid money during the state’s 2015-17 budget cycle, according to the state Health Care Authority.

Why it’s legally protected: The state must provide long-term care for the elderly and the disabled under the requirements of the Medicaid program, and Congress has passed laws requiring states to provide services for the developmentally disabled.

The state constitution sets up a system of courts to enforce laws of the state, and that system must be at least minimally funded to function. But with a budget of $266 million, courts don’t offer much help even if budget writers decided they could go there.

UNPROTECTED: About $12.3 billion, or 34.1 percent of the budget

Prisons: $1.8 billion, or 5 percent of the state budget

Technically, the state doesn’t have the same legal duty to maintain a prison system as it does its network of public schools. But House budget writer Ross Hunter, D-Medina, said there’s not much left to squeeze out of the prison system without releasing dangerous people, creating unsafe conditions inside state prisons or closing one of them.

In the all-cuts alternative budget plan that Gov. Jay Inslee’s office was required to release, the Democratic governor estimated that the state could save about $256 million by releasing offenders early, as well as by keeping offenders in local jails for an extra 10 months before transferring them to state prisons. That no-taxes plan, which Inslee is not recommending to the Legislature, would reduce the average daily prison population by almost 5,000 people, and reduce the number of people supervised by the state after their release by about 2,150.

Higher Education: $3.25 billion, or 9 percent of the state budget

While some scholars have argued that the state constitution requires a certain level of support for public colleges and universities, legislative budget writers haven’t seen it that way. During several years of the economic recession, the Legislature cut state funding of higher education and let universities and colleges raise tuition by as much as 16 percent a year to compensate.

After those years of double-digit tuition increases, though, legislative leaders are hesitant to target higher education funding as they look for potential savings in a new two-year budget. Senate Republicans have instead proposed a tuition-reduction plan that would cost the state about $226 million in the next two years. Backers of that proposal, which would cap tuition at a percentage of the state’s average wage, have yet to explain how they’ll pay for it.

Other human services: $4.6 billion, or 12.8 percent of the state budget

The state Department of Health, state-funded preschool programs and the state Department of Veterans Affairs are just some of the services that the state isn’t constitutionally or legally required to maintain. Others include the Department of Services for the Blind and the Department of Labor and Industries.

Without new tax revenue, Inslee has suggested the state Department of Health might need to reduce family-planning and medical services for about 8,000 people, which would save about $9.7 million.

He has also said the state may need to reduce funding for juvenile courts, as well as cut transition programs for offenders just getting out of prison. That would result in reduced treatment and counseling for sex offenders, for instance, but it would save the state a combined $5.6 million.

The state could find another $20.8 million in savings by eliminating 1,391 preschool spots for low-income children, and save $16.2 million more by cutting foster care benefits for about 258 young adults who are older than 18, according to Inslee’s all-cuts scenario.

Sen. Andy Hill, a Republican from Redmond who is the budget writer in the Senate, has said there are many other small cuts that can be made to state programs, but he has declined to say which ones he is considering this early in the budget-writing process. He has indicated he would like to expand — not cut —state-funded preschool programs.

Some public school funding isn’t considered part of basic education, and doesn’t have the same constitutional protections. One of the main areas that isn’t protected is levy equalization payments, a tax-relief program that provides extra money to school districts that may have trouble raising taxes locally due to lower property tax values.

That program is projected to cost the state about $720 million in the next two years. Inslee has said that without additional tax revenue, the state may need to cut about $262 million from the program, which a Senate analysis said would reduce payments to poor school districts by about 50 percent.

Government operations, legislative agencies, parks and natural resources: $1.39 billion, or 3.8 percent of state budget

The state could essentially close all of its parks and shut down the Department of Natural Resources without violating state or federal laws. That would save the state more than $250 million, according to Hunter, the House budget writer.

Cuts in funding for TVW, the state’s public affairs news network, would also be legal. A reduction of $556,000 would cause the network’s coverage of state public meetings to air only four months a year, according to Inslee’s budget office.

The state could similarly cut about half of the budget for the Legislature and still meet its legal obligations, but that would only net the state about $79 million, according to Hunter’s estimates.

“You could go back to the ‘60s and not have legislative assistants, and nobody’s letters would get answered,” Hunter said. “It wouldn’t be good, but it would be legal.”